Why Zika Isn’t Hurting Luxury Real Estate — Even in Brazil

There aren’t many foreign — or young — buyers

Some vacation seekers in the U.S. have thought twice about traveling to South America recently because of Zika, a mosquito-borne virus that can harm newborn babies. Yet real estate developers say it's done little to hurt sales of luxury homes in Latin America and the Caribbean.

The Zika virus is the suspected cause of microcephaly, a malformation that leaves newborn babies with abnormally small heads. The World Health Organization reported on April 14 that Brazil had 1,113 cases of microcephaly potentially associated with the Zika virus — far more than any other country.

But “the foreign buyer almost doesn’t exist” in Brazil, said Fernando de Nuñez y Lugones, executive vice president of the luxury condo development division of ONE Sotheby’s International Realty. In large cities like Sao Paulo and Rio de Janeiro, therefore, the outbreak is less of an issue for prime property markets.

And Zika fears have so far failed to hurt sales at a 120-unit luxury condominium development in Asunción, Paraguay’s capital city, according to Edgardo Defortuna, the president and founder of Miami-based Fortune International Group, a real estate development and brokerage company. Buyers have reserved 37 of the units during pre-construction phase of the development, called Jade Park. These units are meant to attract affluent Paraguayan retirees, for whom childbirth defects may not be as worrisome.

As of April 19, Zika travel advisories issued by the Centers for Disease Control and Prevention (CDC) covered seven countries in Central America, nine in South America — including Paraguay and Brazil — plus 19 countries and territories in the Caribbean.

And there are of course some areas where it’s a concern for buyers and sellers of real estate. For example, the coastal areas in northern Brazil could be affected because they attract foreign buyers of luxury homes. And in Vitoria, a city on the southeast coast of Brazil, the Zika threat to pregnant women has slowed the pace of home buying among wealthy Brazilian families who accumulate multiple luxury homes, according to Vinicius Cardoso, a residential real estate broker. Others are keeping an eye on surrounding countries. Edgardo Defortuna said, “I was recently in Paraguay. They are all very concerned about being infected.”

Still, for the most part the industry does not seem worried. “It might affect tourism,” said Antigua-based Nuri Katz, president and founder of Apex Capital Partners, “because tourists have options to go anywhere. But a person shopping for luxury real estate in the Caribbean isn’t thinking about that.”

Additionally, Katz believes that, for many Caribbean residents, the spread of the Zika virus is just another outbreak of a mosquito-borne illness. “Last year there was a thing called chikungunya, which is another virus passed through mosquitoes,“ he said.

Katz is leading the development of a cluster of luxury villas in St. Kitts with unit prices averaging $1 million. It’s part of a larger master-planned development called Christophe Harbour, where new single-family homes are selling at multimillion-dollar prices. He describes his villas as “starter second homes in the Caribbean,” and describes most of his prospects as older Americans immune from the risk of Zika-induced birth defects.

“I think most people looking for luxury homes in the Caribbean, generally, have already had children,” Katz said.